According to Lindsey Piegza, chief economist at Stifel, the Fed has without a doubt set up expectations for next month but also put itself in a terrible position.

“Some say policymakers have backed themselves into a corner and will raise rates in December in order to save face with the markets,” Piegza wrote this week in a note to clients. “Of course, raising rates with half of the Fed’s mandate — stable prices — not yet met, also risks the Fed’s credibility.”

Piegza said the Fed has talked up the possibility of a rate hike in 2015 so much that not doing so would make investors and markets lose all trust in its word.

The problem, according to Piegza, is that inflation has still not hit 2% growth — which is one of the Fed’s two mandates along with full employment — and likely won’t by next month’s meeting.

At this point, Piegza seems to have lost faith in the FOMC’s outlook.

“The Fed continues to anticipate conditions will warrant a rate increase by the end of the year: 1) just as they have for years and 2) meaning conditions don’t currently satisfy the needed justification for liftoff,” she wrote in a follow-up note Thursday.

Not only has Piegza begun to question the Fed, but she also expects there is a real chance that the rest of the world will do so as well. Here’s Piegza (emphasis added):

At this point, the Fed’s credibility is on the line. If the Fed doesn’t raise rates in December, they risk the market’s interpretation of an unfounded ‘promise’ to do so and further distrust of monetary policymakers down the line. Of course, if they do raise rates in December despite a lack of momentum in the economy, they risk having to admit an improper policy move should inflation remain stubbornly low for some time or the economy slows further, forcing the Fed to lower rates soon after a rate increase. In other words, they are damned if they do, damned if they don’t.

For what it’s worth, Piegza thinks the Fed will get out of the pickle by not raising rates in December and focusing on “underlying data and not the calendar.”